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Hello, I need help with part a, b and c. Please include the solving process for each. Thank you! On January 1, 2018, Brooks Corporation
Hello, I need help with part a, b and c. Please include the solving process for each. Thank you!
On January 1, 2018, Brooks Corporation exchanged $1,255,500 fair-value consideration for all of the outstanding voting stock of Chandler, Inc. At the acquisition date, Chandler had a book value equal to $1,167,500. Chandler's individual assets and liabilities had fair values equal to their respective book values except for the patented technology account, which was undervalued by $192,000 with an estimated remaining life of six years. The Chandler acquisition was Brooks's only business combination for the year. In case expected synergies did not materialize, Brooks Corporation wished to prepare for a potential future spin-off of Chandler, Inc. Therefore, Brooks had Chandler maintain its separate incorporation and independent accounting information system as elements of continuing value. On December 31, 2018, each company submitted the following financial statements for consolidation. Dividends were declared and paid in the same period. Brooks Corp. Chandler Inc. $ (599,000) 205,000 $ (584,500) 179,000 (104,000) 137,000 (195,000 $ (567,500) 167,000 0 $ (227,000) Income Statement Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earnings from Chandler Net income Statement of Retained Earnings Retained earnings, 1/1 Net income (above) Dividends declared Retained earnings, 12/31 Balance Sheet Current assets Investment in Chandler Trademarks Patented technology Equipment Total assets $(1,570,000) (567,500) 150,000 $(1,987,500) $ (867,500) (227,000) 70,000 $(1,024,500) $ 444,500 $ 185,000 1,484,500 172,000 310,000 624,000 $ 2,775,500 $ (253,000) (535,000) (1,987,500) $(2,775,500) 229,000 453,000 396,000 $ 1,522,500 $ (198,000) (300,000) (1,024,500) $(1,522,500) Liabilities Common stock Retained earnings, 12/31 Total liabilities and equity Note: Parentheses indicate a credit balance. a. Determine the following account balances: Gain on bargain purchase. Earnings from Chandler. Investment in Chandler. b. Prepare a December 31, 2018, consolidated worksheet for Brooks and Chandler. Complete this question by entering your answers in the tabs below. Required A Required B Determine the following account balances. 0 Gain on bargain purchase Equity earnings in Chandler Investment in Chandler 12/31/18 Prepare a December 31, 2018, consolidated worksheet for Brooks and Chandler. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) BROOKS AND CHANDLER Consolidation Worksheet For Year Ending December 31, 2018 Consolidation Entries Accounts Brooks Chandler Debit Credit Consolidated Totals ncome Statement $ (599,000) 205,000 0 Revenues Cost of goods sold Gain on bargain purchase Depreciation and amortization Equity earnings in Chandler Net income $ (584,500) 179,000 (104,000) 137,000 (195,000) $ (567,500) 167,000 0 $ (227,000) Statement of Retained Earnings Retained earnings, 1/1 Net income Dividends declared $(1,570,000) $ (867,500) (567,500) (227,000) 150,000 70,000 $(1,987,500) $(1,024,500) Retained earnings, 12/31 $ 185,000 $ 444,500 0 Balance Sheet Current assets nvestment in Chandler Trademarks Patented technology Equipment Total assets 1,484,500 172,000 310,000 624,000 229,000 453,000 396,000 $ 1,522,500 $ 2,775,500 Liabilities Common stock $ (253,000) $ (198,000) (535,000) (300,000) (1,987,500) (1,024,500) $(2,775,500) $(1,522,500) Retained earnings, 12/31 Total liabilities and equityStep by Step Solution
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